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Sustainable growth rate

Atlantic Transportation Co. has a payout ratio of 60 percent, debt-equity ratio of 50 percent, return on equity of 16 percent, and an assets-sales ratio of 175 percent.

a. What is its sustainable growth rate?
b. What must its profit margin be in order to achieve its sustainable growth rate?

Solution Summary

Sustainable growth rate and the profit margin required for achieving sustainable growth rate have been calculated.